Nvidia stock seems poised to continue outperforming the overall market.
Nvidia (NVDA -9.53%) stock is red-hot. The artificial intelligence (AI) giant’s stock has returned 141% so far this year through Aug. 30, making it the top performer on the S&P 500 index. The stock has also been a gargantuan winner over the long run. It’s returned 25,580% over the last decade, transforming a $1,000 investment into $256,800. (For context, the S&P 500 returned 19.5% and 239%, respectively, over these periods.)
Investors, of course, are concerned with Nvidia’s future. Nobody can predict the future accurately, particularly in the fast-evolving technology world, but with a solid knowledge of Nvidia and the environment in which it operates, we can make some educated predictions.
Here are some predictions for what Nvidia’s business will look like in five years.
1. CEO Jensen Huang will have recently retired or will be on the verge of doing so
For reference, Huang turned 61 earlier this year, according to public records, which would make him 66 in the summer of 2029.
As someone who regularly listens to Nvidia’s earnings calls, it’s obvious to me that Huang loves his work. Yet, it’s grueling being the CEO of a massive company, particularly one that operates in the ultra-competitive cutting-edge tech realm. Huang has been leading the company since he cofounded it in 1993.
It would be fantastic for investors if Huang would lead Nvidia for as long as possible, as he’s the company’s No. 1 competitive advantage. (Maybe he could whip up a digital twin of himself using Nvidia’s Omniverse platform!) Realistically, I think investors will be lucky if he continues as CEO for another four or five years, assuming he remains healthy enough. So, I’m going with the prediction that in five years, Huang will have recently stepped aside as CEO, or be on the verge of doing so. Hopefully, he’ll transition to the role of chairman of the board, again, assuming he remains able.
This topic begs the question: Does Nvidia have a CEO succession plan in place?
2. Nvidia’s GPUs will still dominate the AI chip space
It’s widely accepted as fact that Nvidia has well over a 90% share of the market for advanced AI graphics processing unit (GPU) chips and more than an 80% share of the overall advanced AI chip market. (The latter category mainly includes custom chips -– or application-specific integrated circuits (ASICs) — that many of the big tech companies have developed or are developing for specific use cases.)
Currently, the bulk of the most advanced AI chips are found in data centers, but they will eventually become more common in “edge applications,” such as in cars and robots.
The type of dominance Nvidia enjoys is a wonderful thing for investors given how fast the AI chip market is growing and is projected to continue to grow. This market was already growing at a fast pace, which became a turbocharged pace with the advent of generative AI. This is the tech that has wowed the technology world since OpenAI launched its ChatGPT chatbot in late 2022.
In its fiscal year 2024 (ended Jan. 28), Nvidia’s data center revenue skyrocketed 217% year over year — or more than tripled — to $47.5 billion. In its second quarter of fiscal 2025 (ended July 28, 2024), which it reported last week, data center revenue soared 154% year over year to $26.3 billion, accounting for 87% of the company’s total revenue of $30 billion.
The bulk of data center revenue is generated from AI chips and related technology (software, networking equipment, and other hardware) that together enable AI applications. Nvidia is much more than simply a chip company. Indeed, one of its biggest competitive advantages comes from its huge ecosystem of developers using its CUDA software to develop AI applications.
Lisa Su, who is the CEO of Nvidia competitor Advanced Micro Devices, or AMD, projects the global market for chips to accelerate AI processing in data centers will reach $400 billion in revenue by 2027, which equates to a compound annual growth rate (CAGR) of 72.7%. Barring severe anti-competitive regulatory actions against Nvidia, I think it has the potential to capture the majority of this total addressable market (TAM) for a good number of years, with AMD, Intel, and makers of custom ASICs — such as Broadcom — combined capturing a lesser share.
3. Nvidia will make increasingly more money the closer driverless vehicles get to being legal across the United States
In 2029, I don’t think fully autonomous vehicles will be legal across the U.S., but that they will be close to being so. The closer we get to legalization across the U.S. (and other countries), the more money Nvidia should make from this gigantic secular growth trend.
This comment from CFO Colette Kress during last week’s fiscal Q2 earnings call summarizes how dominant Nvidia’s AI-powered autonomous vehicle platform, DRIVE, is in this space:
Automotive was a key growth driver for the quarter as every automaker developing autonomous vehicle technology is using Nvidia in their data centers. Automotive will drive multibillion dollars in revenue across on-prem[ises] and cloud consumption and will grow as next-generation AV [autonomous vehicle] models require significantly more compute. [Emphasis mine]
4. The X factor
In my March 2020 article on the same topic as this one, I predicted that “Nvidia is incredibly innovative, so there seems a great chance that the company will introduce at least one major new technology that takes nearly everyone by surprise.”
This prediction came to fruition in spades. Since that time, Nvidia launched the Omniverse, which enables companies to develop their own metaverses, and a slew of major innovations for enabling generative AI, a tech that nobody or just about nobody heard of in 2020. This is the nature of disruptive technology.
So, I feel extremely confident that within the next five years, Nvidia will have at least a few huge businesses — meaning multibillion-dollar ones — that are entirely new and that just about nobody (with the possible exception of some research scientists) can predict now.
5. Nvidia’s stock will outperform the market
There is no way that anyone can accurately predict Nvidia’s stock price in five years. A big unknown is the overall market performance over this period, which would greatly affect Nvidia stock’s performance. A recession during this period is possible, for instance.
That said, given the predictions in this article, I feel confident that Nvidia stock will outperform the market over the next five years.